People travelling abroad have reasons to be happy as they will now be entitled to get foreign exchange up to $3,000 against the existing limit of $2,000.

Following changes in the forex rules, travellers going abroad can get up to $3,000, or its equivalent amount in other currencies, from forex dealers without the Reserve Bank’s prior permission.

“The existing limits have been reviewed and it has been decided to increase this ceiling, with immediate effect,” the RBI said in a notification today.

These provisions, however, will not apply to persons going to certain specified countries such as Iraq, Libya, Iran, Russia and the CIS countries.

The notification further said persons going to Libya or Iraq would continue to get up to $5,000, or its equivalent in other currencies, while the existing rules for travellers to Iran, Russia and CIS countries would remain unchanged.

Share sale

To prevent manipulation, the Reserve Bank today replaced the current practice of selling shares of a listed Indian company by a resident to a non-resident at the prevailing market price with an average market price of a longer duration.

The seller will now have to sell the shares at a price not less than the higher price of 26 weeks or two weeks average, says a circular issued by the Reserve Bank today.

“The price of shares transferred (by a resident to a non-resident) by way of sale shall not be less than the price at which a preferential allotment of shares can be made,” the central bank said.

In a preferential allotment, according to Sebi guidelines, the price of shares is the higher of the averages of highs and lows of 26 weeks (six months) and two weeks preceding the relevant date.

The new provision replaces the current norms that say shares transferred by a resident to a non-resident will be at a price not less than the ruling market price on the day of transaction in case of listed shares.

“The RBI move is directed to bring in more transparency and reliability. It will prevent any manipulative tendencies as a single-day price can be manipulated easily but not of several weeks,” SMC Capitals equity head Jagannadham Thunuguntla said.

Further, for unlisted shares, the current norm of following the guidelines of the erstwhile Controller of Capital Issues that considered historical valuations to arrive at fair value of shares has also been changed.

The new norm will be to follow the discounted free cash flow method, which takes into account the future projections of cash flow for deriving the fair value of shares, according to the circular.

The fair value is to be determined by a Sebi registered category-1 merchant banker, or a chartered accountant.


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